Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/34000
Authors: 
Sunde, Uwe
Year of Publication: 
2006
Series/Report no.: 
IZA Discussion Papers 2244
Abstract: 
Economically highly developed countries are mostly democratic. But does this association constitute a causal relationship according to which democracy is a determinant of economic development? Or is it, conversely, economic development that paves the way for democratization? This paper gives an overview of the recent empirical literature that has dealt with this question. The empirical evidence raises doubts about the existence of any direct causation. However, there seem to be indirect causal mechanisms. Democracies seem to implement better conditions for the accumulation of human capital, in particular in terms of a rule of law. On the other hand do democracies not simply arise as consequence of economic development, but because of an adequate social environment with little inequality, that may be associated with economic well-being.
Subjects: 
democracy
development
Lipset hypothesis
causal effect
growth
political institutions
JEL: 
H10
N10
O10
E60
Document Type: 
Working Paper

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